Peru external public debt history

 £.b - I I : ~ INTE ATIONAL BANK FOR RECONSTRUCTION AND DEVELO~~ "~,,-c,. ~~r'\.. Economic Department 66848 PERU r S EXTERl'JAL PUBLIC DEBT HISTOitY Foreign Investments PRSPARED BY: James J. Lynch JanuarJ 1, 1949  CONTENTS Summary I. Historical Review of External Borrowing II. Default on External Debt of Peru III. Causes of Default IV. Course of Default and Factors Involved V. Final Adjustment of the External Debt VI. Outstanding External Debt and Estimated Service Charges VII. Debt Service in the Balance of Payrfrents Appendix  SUMMARY Peru's first external loan was floated in London in 1822. Due nainly to political instability, defaults occurred on this and subsequent loans throughout the 19th century. In 1890 the Peruvian Government signed an agreement covering future payments. Further defaults having taken place, this agreement was revised in 1907 and payments were made for a nm~ber of years up to World War I. After VI/orld War I, Peru borrowed heavily in the United States, By June 30, 1929 the external consolidated debt of Peru amounted to 4:Jlll million and accounted, at that date, for approximately 77% of the total debt of the country. Loans floated in the United States accounted for about fOUI'-fifths of the total external debt. Public debt service; which amounted to only 2 Q 63% of the total budget expenditures in 1920, had risen by 1929 to about 21%. After 1929 cotton and sugar exports, which furnished Peru vuth the bulk of its foreign exchange, declined sharply. The decrease in the gold reserves and the foreign exchange of the central bank, the rapid depreci- ation of the country1s currency and the collapse of the lar~e8t domestic bank in the count~J in October 1930, all led to the default on the ex- ternal debts in 1931. Peruls trade improved from 1931 on, showing favorable trade balances every year through 1946) except 1943, and gold and foreign ex:::hange hold- ings increased materiallyo However, no paYlllents were made on the external dollar debt although direct investment pa;yments during most of thj.s period averaged around $18-1/2 million per year. Finally, in February of 1947, Peru enacted legislation for the re- sumption of interest and amortization payments on its external debt, calling for payments of 1% in 1947-1948) 1-1/2% in 1949,-1950, 2% in 1951- 1952, 2-1/2% in 1953 and thereaftero In addition, a sinking fund was set up for future retirement of bonds e All interest arrears were cancelled. The Foreign Bondholders! Protective Council announced that it would not recommend acceptance of the plan because of the low final interest rate, the cancellation of interest arrears and the unilateral manner in vrh:i.ch the contract changes had been made. The Council of Foreign Bondholders (British) made it clear to the Peruvian Government that they shared these views~ By the end of 1948 only ~25 million of the bonds, out of a total of ~92 million, had assented to the program~ From 1931 to 1948 one loan, the Guano Loan, received relatively favorable treatment, with interest being paid at a rate betvreen 5-1/2% and 4%. The reason for this is not apparent but it may have been due to the high value of guano (~~20 million per year) 0 As of the end of 1949, taking into consideration the present debt adjustment plan, Peru 'will have a total external debt of approxiraately U.S. C94 million. The major portion of the debt vall be made up of publicly-held external dollar obligations, estimated to be outst<;mding in the magnitude of ~i¥87 million. United States Government loans ,till account for ~4-1/2 million and most of the remainder will be debts in sterling (Guano Loan) equivalent to U,S. ~2 million.  ii. It is estimated that the interest and amortization payments of these debts will amount to about $2.6 million per year in 1949, all payable in dollars with the exception of the equivalent of U"S .. ~300,OOO payable in sterling~ A projection of the debt requirement of Peru over the next 25 years, based on present debt outstanding, indicates that interest and amortization payments will rise from ~206 million in 1949 to a hj_gh of ~3.4 million in 1953 and decline thereafter to ~2.7 million by 1973. The International Ivionetary Fund's latest balance of payments study indicates that trade and other current items were unfavorable to Peru in the amount of ~?19 million in 1946 and ~15.,2 million in 1947. The debt service, as pointed out above, am014'1ts to only ~Jo4 million in the peak yearo The unfavorable balance of payments position of Peru has ce.en reflected in some decline of the gold and foreign exchange holdings of the country. The net effect of tIllS unfavorable trend has been to re- duce disposable holdings of gold and foreign exchange to around UcS o $19.1 million.. Holdings of this amount would take care of the deficit in Peruts international transactions year if of the magnitude of that incurred in 1946 and 1947. . I. Historical Review of External Borrowing Peru's first external loan was floated in London in 1822, when ~l,- 200,000 were borrowed to finance the war of independence with Srain., Three years later, a loan for ~616,50o was placed. These together with a debt of about 1,500,000 pesos, constituted the total external debt of the nation until 1849. Due to political instability, these loans went into default and payment was suspended until 1349:- In 1849 the Peruvian Government issued bonds in the amount of iOl,788,- 800 to convert the principal of the outstanding issues and bond~ ar:1ount- ing to ~1,891,300 to fund the accrued interest. In 1853 the above- mentioned bonds Vlere redeemed from the proceeds of a new loan of 600,,- 000", During the period 1853 to 1872 several foreign loans were issued, chiefly for railroad construction purposes, In 1875} the Peruvian Govern- ment was again forced to suspend payment of interest and ~~ortization& The war with Chile, from 1879 to 1833, further complicated the situation and negotiations ltnth the bondholders did not begin until 1886.) At that time the total external debt of Peru amounted to about 49 million Peru:lTian pounds, of which 33 million Peruvian pounds represented principal and the balance, accrued interest. In 1890 the Peruvian Government Signed an agreement with a committee appointed by the bondholders, the principal featurf3s of uhioh i-rere as follows: (1) the committee relieved Peru of all responsibility for the bonds issued abroad in 1869, 1870 and 1872; (2) the Gover~~ent ceded to the committee all state railways (1254 kilometers) for a period of 66 years; (3) the commj.ttee received the right to operate the line govern- ment steamers on Lake Titacaca for a period of 66 years; (4) the Govern- ment agreed to pay the comlnittee 30 annuities of ;b60,OOO each, cor.rnencing in 1893 and guaranteed by certain customs duties; (5) acquisition of the guano concession; (6) the corporation formed by the committee \vas exempted from Peruvian taxes o The stipulated annual paYlllents were not met by the Peruvian Govern- ment and, in 1907, a new agreelJent in regard to annuities lNas reached, under which the Per-u.vian Government contracted to pay the corporation 30 annuities of ;b80,OOO in monthly installment-s, and to extend the of the corporation to operate the railways and steamship lines for an ad- ditional 17 years, provided the Goverr~ent received 50% of the operating profits. Payments of the annuities were made from 1907 to 1928 at which time the Peruvian Corporation waived the right to receive further pay- ments and turned back to Peru the remainder of 2,0°°1°°0 tons of guano. In 1922 Peru issued the Guano Loan 7-1/2% due 19h8~ (See Appendix III)"  After World War I, peru began to borrow heavily in the United states. The following loa.ns were sold in quick succession; the 8% ~~2,500,ooo Pe- troleum Loan of 1922, the 8% ~7 million Sanitation Loan of 1924, the 7~ 1/2% (.>7,500$)000 Petroleum Loan of 1925, the 8% $2 million Sanitation Loan of 1926, the 7~1/2% $16 million Dollar Loan of 1926, and the 7% ~~15 r.:illian Tobacco Loan of 1927. In 1927 and 1928 UeS" ~94,,5 million of external bonds were issued" Of these, ~90 million were National Government bonds, of which I:10re than half of the proceeds were used for retiring short~term credits and the earlier dollar loans listed above_ As a result of these loans, six ex- ternal issues were redeemed but the total external debt 1J'ras increB.sed greatly. However, the short-term debt as well as the external unfunded claims had been vdped outo In the 1920-1928 period, the public debt of Peru was double do On June 30, 1929 the external consolidated debt amounted to ~,lll million and represented at that date about 71% of the total debt. Loans floated in the United states accounted for about four-fifths of the total external debt. The public debt service carried in the original budget of 1920 amount~ ed to 231~335 Peruvian pounds, 2 e 63% of the total expenditures~ In 1927 and 1928 the amount of the debt service had risen to more than 2~lOO~OOO Peruvian pounds each year, about 19Q2% of total e~¥enditureso The esti- mated service in 1929 was almost 2$600,000 Peruvian pounds, 20 0 6% of esti- mated expenditure$~ II. Default on External Debt of Peru i On May 29, 19)1, the Peruvian Government issued a decree suspending, until December 31, 19)1, the payment of service charges on the entire public debt of the Republic, with the exception of a fev, local bank and the Guano Loan (see Appendix III), which had been obtained during the latter part of 1930, and of an issue of customs warrants which had been au·thorized by a decree dated :March )0, 1931 for the purpose of obtaining funds lldth which to pay salaI"'J arrears ovdng to Govern1uen"t. eop1oyees o Two other decrees, issued on May 29, 19)1 and June 5, 1931,9 authorized the City of Lima and the Province of Callao, respectively, to suspend indefinitely the payment of service charges on their outstanding ex- ternal bonds q The securities affected and the anounts outstanding as of December )1, 1930 are listed belOlJ:  -J- Table I • II" External Debt and Service Charges as of Dec~ 31, 1930 Republic of Per~ An."1ual External Debt in U~Se Dollars Outstanding Service Tobacco Loan, 7%, 1927-1959 $14,41+7;50'0 Y $1,200,000 National Loan, 1st series 6%, 1928-1961 48,3 83$000 3:;500,000 National Loan, 2nd series 6%, 1928-1961 24,469,500 1,750,000 Amount due Electric Boat Co. 1,oal,6L~1 62if,000 Total ~8o,381,64l ~7,071~sOOO 2/ Callao Municipal Loan 7-1/2%, 1927-19uB 1 j 2u7,500 165,000 City of LL~ 6-1/2%, 1928-1958 2,,807,9 000 287,655 --_.- Total $92,516;141 ~;;7 ,1))26,655 External Debt in Sterling 2/ Lima rlunicipai Loan 5%, 1911-1965 i, 491,800 i:, 33,265 Guano Loan 7-1/2%, 1922-1948 1,085,300 11L}.400 National Loan 2nd series 6%, 1928-1961 1~958,200 140~OOO Total in ~ Sterling Total in U,.,S" $ Grand Total y Includes ~r5,629,500 ovmed by the Peruvian GovernmentJ) 31 The Republic of Peru is contingently'liable on Callao 7-1/2% of 1927 and assumed liability for interest and sinking fund payments on City of Lima 5%, 1911~ 11 Excludes floating debt of US $7,495,405 and st6rling ;b341,455 and internal sterling debt of ;520,000 0 III. Causes of Default In 1931, at the of default on the external debt, the ecoDo~ic welfare of Peru and its ability to meet its international obligations depended to a large extent upon the petroleum, copper amI sugar indus- tries.. The petroleum and copper industries were owned by IIfo:ceigners ll • The benefits derived by Peru, consisted, therefore, chiefly of taxes, wages and the investments made by foreign companies" The yield from these commodities was high and the volune of exports increased. This, combined ·with an extensive progralll of public works construction, fi- nanced mainly out of the proceeds of foreign borrowing, was chiefly responsible for the period of Peru's prosperity which lasted to the end of 1929.  - J.j. - The cessation of the importation of foreign capital and Vforld-ldde depression, which brought about a suspension of public works construction and a sharp decline in the price of the principal export cOIl.1Dodities, had an adverse effect on the entire countryc The cotton and su~ar exports furnished Peru with the bulk of its foreign exchange" For the five yea:C8 1925-1929, the e:Arports of these commodities averaged $39 million per year but in 1930 they declined to ~23 million. This" in turn, adversely af- fected the countryPs balance of payraents and, along wlth other factors, resulted in a decrease in the gold reserves of the Central Be,nk and a rapid depreciation of the currencyo ~ The collapse~ in Octobe~ 1930, of the largest domestic commercial bank in the country added further difficultiesQ Political distrubances broke out at the end of February 1931. During the first eleven days in March, Peru had four presidents and the finances of the state were in a chaotic conditiollo Owing to the de~ preciation of the exchange value of the currencY$ the service of the ex,.- ternal debt, which was alread:r large, increased substantiallyo Service requirements on the external funded debt for the year 1931 B.l-:lounted to approxi.'J.ately ~S,639,OOO and represented approximately 34% of the esti- mated ordinary revenues of :;;'25)2oo~000 for tha.t year o In addition, many taxes had been collected in advance by the previous government to pay for public works construction and were not available for current use" IV. Course of Default and Factors Involved Reflecting the unfavorable factors noted above) during each of the years 1930 to 1934 inclUSive .• the revenue and expense accounts of the Peruvian Government showed deficits~ In 1933 and 19341 because of the Leticia dispute with Colombia" expenditures far military purposes were unusua.lly high.. The depreCiation of the sol added naterially to the local funds required for meeting external payments o Despite the favorable trade balance, ranging from ~t;41 million in 1929 to $21 million in 1932, and the small external debt payment.s, gold reserves declined from $22 million to $8 million during this period and foreign exchange holdings from $3 million to $.100~ 000) As can be seen from Table 2, the trade balance remained favorable from 1935 through 1946, except for a small unfavorable balance of $2 million in 1943~ During this period a substantial inc:rease took place in the gold and foreign exchange holdings; the former rising from ~10 million in 1935 to $20 million in 1947 and the latter frow $2 million to ~y26 million during the same period., Nevertheless, payments were not made on the ex- ternal dollar debt (through 1946) although direct investr:lent pa:~ents y From ~o .. 40 a sol FebruaI"'J 1930 to ~0.30 a sol by Decanber 1930.  -5 .. averaged around $18.4 million per year o Data relative to the ability of Peru to pay on its external bond obligations are sho~n in Table 2~ Table 2 Trade ___Ba1an~e _ _- 4fj Gold and Foreign Exchange Holdings -_ _ _ _ _, , _ _ _ _ _ . __ and External Debt Payments (In millions of U.S. dollars) - -"--...---- Gold and Foreign Exchange Holdings Interest and Estimated Act.ual Dividend He- Original l~molmts mi tted Abroad Years Trade Y Gold Foreign Total contractual Paid in on Direct In- Balance (Grossl Ext::hange B2,sja Cash vestraents 1929 40 0 7 22.3 3,,4 25,,7 7 8,,0 NRA 1930 30~1 20,,8 205 2303 8,,7 8,00 NB. A 1931 21.,2 l2C18 4.8 17 0 6 80 6 4~5 NRA 1932 20.9 8.,0 0,,1 8~1 8~6 OJ2 nil'\. 1933 25.6 8.1 0,;-6 8e 7 8 6 0 0,,4 NJ:1A 1934 2905 903 100 10 0 3 8,,6 0;:2 BRA 1935 30,,3 907 109 11 0 6 8c 6 00 2 NP..i\ 1936 32,,1 19 0 6 503 24~9 8,,6 00 1 NRA 1937 31,,1 20<;15 10,,1 30!)6 80 6 0<)1 NRA 1938 13,19 19,,9 41'>7 24~6 8.. 5 00 2 26,,4 1939 19~7 19.9 5,,5 25 .. 4 80 5 0,,2 20 0 6 1940 7,,9 20,,1 5e-4 25,5 8,,5 0 .. 1 16.,3 1941 1.~Q8 21t'3 580 27,,1 6,5 0",2 15.,9 1942 18 .. 9 2407 15,9 40,,6 80 5 0()3 16,6 ., r' 4 1943 - 2(10 ;)11">0 1503 46,,3 8,,5 0",3 ...L..?-; t 1944 3,,1 31,.6 14,,7 46 0 3 Be;) 00 3 21 0 0 1945 17,,2 2709 2L5 4904 80 5 0,,2 20,,0 1946 28,,0 23",9 1907 43,,6 8,,5 00 3 18,,5 1947 -1.3 .. 7 20,,2 26,,4 46.6 8,,5 1.,6 13".0 11 Recorded data are usually affected by the overvaluation of some export artic1es.o NRA - Not Readily Available Sources: International Financial Statistics League of Nations Statistical Yearbook  -6- V. Final Adjustnent of the External Debt On February 28, 1947 Peru passed a law providing for the resumption of interest and amortization payments on its external debt. This lavf provj.ded for payment on the external loans at an annual rate of 17& of face value in 1947 and 1948, 1-1/2% in 1949 and 1950, 2% in 1951-1952, 2-1/2% in 1953 and thereafter" A sinking fund of 1/2 of 1% per annUlll would be used to acquire, in the market, bonds for retirement., Unpaid interest to December 31, 1947, amounting to ~95 million, would be can- celled without compensation. The Foreign Bondholders Protective Council announced that it would not recommend acceptance of the plan because, (1) the final intcre;;;t rate of 2-1/2% was below standard, (2) the cancellation of all interest arrears ·was a departure from the principle of reasonable debt adjustment, 0) the legislation was unsatisfactory becau.::;e of the loopholes it con- tained and the contract changes :r:'!ade vdthout the bondholders: consent, and (4) the service obligation assumed was proportionately lOWe The money required to handle this prograI:l for the year J.947 was estimat,ed to be only 1% of the current Peruvian national budget and only about 1% of the value of Peruvian world exports o Sterling Debt Adjustment Plan~ . rr.'l.e sterling readjust.ment pl.ln was sub"'Stantially the Sa.maas-the dollar readjustment plan discusssd abov8 u The Council of Foreign Bondholders (British) made it clear to the Peruvian Government that they shared the views of the Foreign Bondholders Protective Coun:::11 outlined above~ Old sterlin6 bonds (~'rith the exception of the GUano Loan which "V'laS sei:,tled in 1938 -(sse Lppendix III) were to be exchanged for new dollar bonds of 1947-1997 Series HZ"" at the rate of ~4 principal amount for each JJ. principal amount of tho sterling issue.. New bonds would bear interest of 11~ for 1947-1948:; 1-1/2% for 1949-1950, 3% for 1953 and thereafter o A sinking fund of 1-1/2 of ll~ annually of the amount of bonds issued was to be set up under the offer .. Arrears of interest (16 years), amou..'1ting to about ~2.\o50o)oOO (UcSQ ~?lO million), \~ere to be cancelled o British Government autho!'ities refused the application for permission to offer this readjustment plan, pre- sumably on the grounds that acceptance of such an offer, from a foreign exchange point of view, would be contrary to the nati·:mal interest" Of the total outstanding debt included under the above adjustment plans (U.S. ~p92 million), :iJ;25 rr..illion worth of bonds had been assented to the plans by the end of 1948 0 VI. Outstanding External Deb~ and Estimated Servi~~~~ As of the end of 191.9 3/, Peru will have a total external debt of approximately UoS., ~(93,636,c()Oo The major portion of this debt will be made up of publicly-held external dollar obli;,;ations, estimated to be outstanding in the magnitude of U.. Se ~;86 .. 961;OOOo :Jnited States Govern- ment loans account for ~(4,672,000o bost of the remainder is accounted for by debts in sterling (Guano Loan) eqUivalent to U.So ~v2,OOJ;OOOo Y Assuming all the present bondholders assent to the 1947 Permc:.nent Debt Adjustment Plan.  - 7- Total interest and amortization payments in 1949 on the external debt will amount to U"S .. $2,635,oOOQ?-1 The service paylllents are re- quired to be made inUoS. dollars, with the exception of ~75)OOO pay- able in pounds sterling (equivalent to U.S. t302 p OOO)o The lilajor portion of these interest and amortization payments, Q2,333,000, is due on the external publicly-held debte These estLmated interest and amortization payments are projected in Table 3 over the next 25 years, as provided in the Readjustment Plan of 1941. (See Appendix II for details). Table .3 External Debt of Peru (In thousands of U~S·;-dollars) Grand Total Principal Principal Interest Total Years Outstanding PaymeIIL fa;yment raym~ 1949 93 s 636 1,091 1,544 2$635 1950 90~ 195 1,182 Is486 2,668 1951 87$547 1,264 1,836 3,100 1952 84,896 1,315 l.i 770 3,085 1953 82,103 1,317 2,094 3~411 1954 79,683 1,359 2,206 3~385 1955 77,152 1,419 1,95, 3,374 1956 74,484 1,192 1,831 3,073 1957 71,997 1,188 1,816 3,004 1958 69J 438 1,245 1,750 2,995 ;1.959 66,734 1,305 1,680 2,985 1960 53,880 1,370 1,606 2,976 1961 60,865 1,439 1,527 2,966 1962 57,677 1,,511 1,446 2,957 1963 54,308 1,316 1,358 2,674 1964 51,018 1,39 8 1,276 2,674 1965 47,523 1,486 1,183 2,674 1966 43,811 1,579 1,095 2,674 1967 39;864 1,679 997 2,674 1968 35,672 1,782 892 2.s67Lf 1969 31,217 1,893 781 2,6 r4 r 1970 26;485 2,012 662 2,674 1971 21,459 2,137 537 2,674 1972 16,114 2,271 403 2,674 1913 10,437 2,413 261 2,674 Note: The projected payments on the inter-govermnent loans are based on the actual proposed schedules of payment on these loans, V'Jith the assumption that all authorized portions not yet dra"ij'ID dOVID "will be in the near future. In the case of the dollar bonds, it was assumed that the average price at which Peru would be able to buy in the bopds in the open market for sinking flxnd purposes would be 20 in 1948-1949 and 1950, 30 in 1951 and 1952, 40 in 1953 and thereafter. These prices are based partly on past and present price levels of the dollar issues in New York and partly on the assumption that there vdll be periods of low bond prices in the future. In the case of the Guano Sterling Loan, which has received special interest and amortization treatment through- out the life of the loan, a price of 90 has been taken as the level for purchase in London for the sinking funds. (Footnote on following page)  - 8- VII. Debt Service in the Balance of Pa~ts There are no official complete balance of pa~nent figures covering the 1930-1947 period., The best available data for 1946 and 1947, based on certain official Peruvian figures, have recently been circulated by the International Monetary Fund and are discussed below.. It must be emphasized) however, that these balance of pa~ent studies are only partially complete and should be taken only as an indication of the magnitude of the balance of pa~1Uent problemso The over-all trade balance, including the non~monetary gold move- ment, was favorable to the extent of :\:;2502 million in 1946 and ~,J19t'2 million in 1947. Service payments offset this export balance, largely as a result of net payments for transportation and investment income. Direct investment income paJ1nents out of Peru amounted to U.S. ~7.8 million in 1947 (IBRD estimated ;,.,13 million lll ) Taking both merchandising and the current items together, we find th~t Peru had an unfavorable balance on total current transactions of U.. S .. ~;19,,0 million in 1946 and UoS. ~:il.592 million in 19470 (See Appendix I for additional de .... tails). The debt service as calculated in this report will add about ~19 750 3 000 to the outpayments on service aCColmto The position of Peru from the standpoint of freely disposa~le gold and foreign exchange holdings, as Of September 30, 1948, is brought out in the following table" Table 4 - Central Reserve Bank of Peru Margin of Freely Disposable Exch~nge (in soles) as of September 30, 1948 Gold holdings 174,,0 Foreign exchange (no break- down available) Total I? Value (sales) 2. UoS., dollars (UoSo ~ = 69 .50 soles) Less liabilities D.1F Legal gold reserve (U.So $0 40 :: S/O 1) 0 3iJ~8 Disposable holdings in sales 124:l2 Disposable holdings in UeS. $ 19<)1 (Footnote from preceding page) 31 Assuming all the present bondholders assent to the 1947 Permanent Debt Adjustment Plano  9 - As can be seen from the above table, the freely disposable gold mld foreign exchange are down to U.S. ~19 million. This, contrasted to the trade and other current items deficit for 1947 of UoSe ~15,200,OOO indi- cates that Peru is in a poor posi-tiol1c.  AFPENDTI I Balance of Payments (IniiiiIlions of dollars) 1946 1947 CreditIfebit Credit Deb'it'·-------<- Re- Pay- Net Credit,' Re- Pay- Net Cr'3dH. Current Transactions -- ceipts ments or DebitC-:). ~eipt!:! ments ~~EitiJ. 1. Merchandise ~1.1"" 1,;.2) 135,,4 11503 20 Q l 15603 144~4 1109 1.1 Exports and imports (both feo.,b o ) 148,.,9 115.3 33,,6 150,,9 lL~4ch 6,,6 1.,2 Other -1305 -1305 5,,4 5,,4 2. Non-monetar,r gold move- . rrient (net) 3. Foreign travel 4. Transportation (4.1 + 501 202 5.8 5.1 - 306 7.3 1;,9 - 2.9 703 - 1,,0 402) 2.4 21.7 -1903 4,,9 29.9 -25 ..1 4.1 Gross freight 00 9 :1.9;,6 ...18.. 7 20 6 26;)7 -24.1 4~2 other 5. Insurance 105 lQ7 2Q2 205 ;.. 0:.6 ":" 0.,8 2Q3 2.. 7 3'112 3,,8 - - 1.. 1 09 6'. Investment income (6 0 1 thru 6~3) 6.1 Direct investments 18.. 5 18,,3 -18 e 5 -18.3 - 7.8 6,,2 - 7c 8 - 60 2 6~2 Other interest ..... 0.2 ... 0.2 10-6 ..;. 1 . . . 6 6.3 Other equity 7. Government, not incl. elsewhere (701 "" 7.2) Sol 50 6 - 00 6 109 404 - 2.,.5 7.1 Military expendi~ tures and surplus property 7.2 Other 8. Miscellaneous . 1.3 3.8 1.0 2,,0 30 6 - Oa7 - 0,,1 - 1,,9 - 4,,4 - 2,,5 303 - 202 3,,0 2,,7 .3 9. Donations (9.1 thru 905) 1.5 00 6 + 0.9 20 8 2 8 0 9.1 Personal and insti- tutional remittances 9.2 Other private trans- 'fers 9.3 Reparations 1.2 0.6 0.6 2.. 2 - 2-:>2 9.4 UNRRA 9.5 Other governmental grants - (;6 - - 0.3 00 3 .6 10. Total current trans- actions (1 thru 9) 15405 173.4 -19,,0 '. 180.8 195 .. 9 -15(1'2 Errors and Omissions (16-10) 105 - .8  APPLNDIX...l (Cont.) Balance of Paym~ (In millions of dollars) Net i:ilovement Increase (+) or Decreb,se (-) 1946 1947 _.- --- Liabil- Net Lj.abil:-- Net- . Assets ities Assets Assets it.i~s__ ~~ T)!ovement of Capital ann }.5onetary Gold ~riva te ( exe Iudiiigbanking institu tions ) 11Q Long-tenn capital (1101 thru 11~6) 11.1 Direct investment 11,,0 11~2 Portfolio securities: bonds 11~4 Amortizati0n ) 11'13 Portfolio securities: shares ) noa" ~O,,2 - 11.5 Other concractua1 repa;yments lLr. other 12,. S'hort-term capital (12.1 thru 12.3) 0<)9 -10.0 12.1 Payments and clearing agreements 1202 Other restricted 1203 Other 00 9 Jfficial and Banking Institutions 13. Long-term capital (13.1 thru 13.6) 1.8 21 .. 6 13.1 Sale of vested direct invest- ments a~d securities 13.2 Other portfolio securities 13.3 l~ans to official and banking institutions and from all sources 0,,4 - 00 4 5.,6 .- 5.6 13.4 Amortization .8 .8 13.5 Other contractual repayments ,,4 .4 13.6 Other 1:8 l,,8 26,,8 26.8 ~4. Short-term capital (14,,1 thru 14,,4) - 307 103 5 .. 0 6 .. 8 2),,6 -16.7 14.1 Payments and clearing agree- ments 14.2 Other restricted 104 - 1'14 23,,6 -26.3 14.3 Unrestricted liabilities to official and banking insti- tutions 14.4 Other unrestricted .. -oa ... 00 1 - - 307 - 307 6 .. 8 6.. 9 .5. Monetary gold - 4.1 - 4,,1 3.8 ... - 3.8 .6. Total movement of capital and monetary gold 1705 19.4 35'14 -16 G o (11 through 15)  APP:ENDIX I I External Debt of Peru (In thousands of U.S. Dolla,rs) --17Ster11ng Guano Loan Guano Loan Series A,.B~ 0, D & E (In thousands of P~)'\::.nd.s) (In thousavds of UcS. $) Dc 113.r J30nds In- In~ In- Prin- Prin- te- To,- Prin- Prin- te- To- Prin- Prin- te- To- cipal cipal rest tal cip a l cipal rest tal cipal cipal rest. tal Out- pay- pay- pay- Out- Pay- Pay- Pay- Out- pay- P~y- pay- standing ment ment ment standing ment me;nt me't'~t stang,ing ment ment ment 1949 497 55 20 75 2~003 221 81 302 86~961 . 431 1p304 1,735 1950 436 58 17 75 1,757 233 69 302 84~805 510 1,272 1»782 1951 372 60 15 75 1D499 242 60 302 82.254 583 1~645 2~228 1952 305 63 12 75 1»229 25'~ 48 302 80~311 622 1)'606 21 228 1953 235 66 9 75 947 266 36 302 78~239 718 1 1 956 2,674 1954 162 69 6 75 653 278 24 302 76,445 "102 19912 2,674 1955 86 72 3 75 347 290 12 302 74~539 810 1,,864 Z~674 1956 7 6 ~ 6 28 24 W 24 72,509 861 1~813 2~674 1957 70 ,357 915 1:1759 2?674 1958 68~071 972 1,702 2,674 1959 65~641 1,032 1,642 2~674 1960 53,060 1,097 1,577 2~674 1961 60 i 318 1~166 1~508 2,674 1962 57~404 1~238 1~436 2~674 1963 54 p308 1~316 1~358 2~674 1964 51,018 1,398 1,276 2~674 1965 47,523 1,486 1,188 2,674 1966 43~811 1,579 1,095 2~674 1967 39;864 1,677 997 2,674 1968 35,672 1,782 892 2,674 1969 31.217 19 89 3 781 2,674 1970 26~485 2,012 662 2,674 1971 21,459 2~137 537 2,674 1972 16,114 2,271 403 2~674 1973 10,437 2~413. 261 2,674 ,1) Assuming that the sinking fund will operate~. by the purchase - of 'bonds .. at average . price . of 90. (Footnoteac~ntinued on hbxt page)  APpmmIX II (Cant.) External Debt of Peru (In thousands of ,U.S. dollars) 2/ U.S. Government Loans Total Dollar Deb';; Grnnd Total In- In- In- Prin- Prin- te·- Ta- Prin- Prin'- te- To- Prin- Prin- te- To- cipa1 cipa1 rest tal cipal cipa1 rest tal cipa1 cipa1 rest tal Out- pay- Pay- Pay,- Out- PI:W- Pa::.r- pay- Out- pay- pay- pay- strmding ment ment ffi8Ut stanct~r,.~e!1t fficnt mellt l?j;ancLil'~g ment ment ment 1949 4~672 439 159 598 91~633 81'-) 1·l.f.6~ 2~333 93~636 1~O91 1;51 -4-4 2~635 1950 4,233 439 145 584 89t 038 9i.r9 1~417 2~'j66 90 p795 1,182 1,!~86 2]668 1951 30'794 439 131 570 86~O48 Ip022 1~'776 2~798 8'7,;547 1;264 lr836 3;100 1952 3~356 439 116 555 83~667 1~o61 19'122 2~783 84,896 17 315 1?770 3 p 085 1953 2.917 333 102 435 81t>156 1,,051 2~O58 3y 910 82,,103 1~'317 2~094 3p411 1954- 2,585 319 90 409 79~030 1:081 r 2~002 3~083 79~683 1~359 2 t 026 3.385 1955 2?266 319 79 398 76 p 805 Ip129 1tl943 3,..072 77;115 2 1p419 1,955 3,374 1956 1,947 307 68 375 74~456 I t 168 I p 881 30 904 74\)484 1~192 1~881 3~073 195? 1,640 273 57 330 71~997 15 188 1 9 816 3~OO4 71~997 1~188 1~816 3~004 1958 11'367 273 48 321 69 p 438 1;1245 1\1750 2,995 69~438 lji245 1?75 0 2,995 1959 1,093 273 38 311 66~734 I p 305 1,680 2~98.5 66 11 734 10305 1 p 680 2t 985 1960 820 273 29 302 53\)880 1~370 19 606 2,976 53,880 1~370 Ij606 2,976 1.961 547 273 19 292 60~865 1~439 1,5 7 2 2,966 60~865 1?439 1~527 2,966 1962 273 273 10 283 57,677 19511 1 11 446 2~957 57 r 677 1,511 1,446 2~957 1963 54'1308 1!.316 1~358 2~674 54~308 1 p316 Ip358 2,67 4 1.964 51\i018 1~398 11)2'16 20 674 51,018 19398 1,276 2v 674 1965 47\l523 1,486 10 188 29 674 47~523 1,486 1~188 20 674 1966 43.,811 1~579 19 950 29 674 !+J'c 811 1,579 If- 095 2,674 1967 8 399 64 1~677 997 2,674 39,)861} 1.677 997 2,674 1968 35~672 ls782 892 2~674 3:::'6'72 -''I 1,782 892 2,674 1969 1 3 9 721 8 19 93 781 2~674 1 3 r?!{ 1,893 781 2t 674 1970 26.485 2,012 662 2 Q 674 26 p 5 4b 2~012 662 2~674 1971 21~459 2,137 537 2~674 21~459 2~137 537 2~674 1972 16\1114 2~271 403 2~674 16~114 2~271 403 2~674 1973 lOr.437 2~413 261 2~674 10,,437 2,413 261 2.674 ........ -l. ?J Includes dollar bonds outstanding as of 1947 in the amount of $85~623~500 less $6~275tOOO held oy Peruvian . banks, or $79,348,000 plus b2§442,100 of sterling bondso These are to be converted in~o new bonds Series A, B t C. D & E. It is assumed that the sinking fund will operate by the purchase of bonds at the following prices: 20 in 1948, 1949 ana. 1950; 30 in 1951 and 1952;· and 40 in 1953 and thereafter. (Footnotes continued on following page) ApPENDIX U. (Footnotes Continued) JI Includes the following: - Export-Import }lank $:W4~404 O.. FcL.C. Outstanding .53:t.;L:.~8 Unutilized '0); ,562 Maritime Commission 4v099 •. .5CO W Underl,.500o  APPENDIX III The Gunao Loan The 7-1/2% Guano Loan of 1922 due in 1948, received relatively favor- able treatment, with interest being paid at first for 5-1/2% and later at 3-3/4% for a short while and then at 4% from June 1, 1938 to date in ac- cordance with the readjustment offer of October 20, 1938. The reason for the payment of interest and amortization on these bonds over a l7-year period, when most of the other external debts of Peru were in default, is difficult to explain because the security provisions seemed no stronger than those applicable to the dollar bonds. The guano loan was secured, (1) by a first charge on the revenues derived from a tax levied on all guano sold for consumption in Peru and (2) by deposit with the banker's agent of more than 50% of the shares of the Compania Administradora del Guano, which is the only channel through vdth the Government sells guano to agriculturists in Peru. Sales outside of Peru are not allowed. It was provided that the government would not assume direct arulunistration or collection of the guano tax during the life of this loan. In recent years, the guano harvest was sold to domestic farmers of Peru for about the equivalent of U.S. :\y2,800,000. This fertilizer if sold abroad would bring in foreign exchange estimated at about U.S. ~20 million. This factor may account for the more favorable treatment received by this loan.